From the minimum wage to living standards: components and trends

Adélaïde Favrat, Delphine Prady et Chloé Tavan

In 2011, workers earning the hourly minimum wage were more likely to be at the low
end of the living-standards scale than other employees. Their living standards stood
at a mere two-thirds of those of employees earning over 1.1 times the minimum wage.
This differential reflects the fact that minimum-wage workers have less earned income,
especially as they are more likely to work part-time and to experience jobless spells
during the year. The tax and social-insurance system, however, tends to narrow the
gap by raising the average living standard of minimum-wage workers by 8% and lowering
that of workers paid above the minimum wage. Social benefits and employment-support
measures account for a total 11% of minimum-wage workers' disposable income. On the
other hand, the contribution of employment-support measures-the working tax credit
(Prime Pour l'Emploi: PPE) and the work-related provisions of the earned-income supplement
(Revenu de Solidarité Active: RSA)-is modest by comparison with the other components
of minimum-wage workers' disposable income, owing to jobless spells and supplementary
income received by their households, which excludes them from these means-tested benefits.
The living standards of minimum-wage workers are, however, relatively diverse. Twenty-eight
percent have a living standard above the median level. This is mainly due to the annual
number of hours worked and spousal income contributions. Minimum-wage workers living
in single-parent families have far lower living standards than people living in partnerships
without children, despite fairly similar wage income.
Between 1999 and 2012, for a given family configuration and a given number of hours
worked, social-insurance and tax legislation boosted the real disposable income of
minimum-wage households faster than the real minimum wage, by over 10% versus 7%.
The implementation of measures to support the income of low-wage workers-the PPE in
2001 and the RSA...